After we determine with our clients whether they need an audit to satisfy outside parties, the question then turns to what are the goals? Our job even before we begin looking at the numbers is to understand what level of service is right for our clients and their expected outcomes. There are three levels of service that essentially pair the scope of the work with the level of comfort in the accuracy of the financial information. (Source: AICPA website)

 

Audit

Often prepared for companies because outside third parties (such as banks, creditors, potential purchasers and outside investors) require an auditor’s opinion on the financial statements

  • Objective: To obtain a high level of assurance about whether the financial statements as a whole are free of material misstatement thereby enabling the auditor to express an opinion on whether the financial statements are presented fairly, in all material respects.
  • Level of Assurance: To obtain a high, but not absolute, level of assurance about whether the financial statements are free of material misstatement.

 

Review

Often prepared for privately held companies because of requirements of outside third parties (such as banks, creditors and potential purchasers) that are looking for comfort that the financial statements are not materially misstated

  • Objective: To obtain limited assurance that there are no material modifications that should be made to the financial statements
  • Level of Assurance: The accountant obtains limited assurance that there are no material modifications that should be made to the financial statements

 

Compilation

Generally appropriate for privately held companies and are often prepared for simple situations (e.g., a lender needs GAAP financial statements instead of the statements the internal accounting system produces or the lender needs the comfort provided by knowing that an accountant read the financial statements).

  • Objective: To assist management in presenting financial information in the form of financial statements without undertaking to provide any assurance that there are no material modifications that should be made to the financial statements
  • Level of Assurance: The accountant does not obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Which level is right for you? Let’s talk.

What level of insight is right for your business and financial goals? DS+B will create a tailored solution that gives your business the right blend of assurance and accuracy needed to have confidence in your numbers within a cost-effective engagement.

Contact us for a free consultation.